Green Thumb 4Q22 Earnings report.
Green Thumb Industries (GTBIF) is a Hedgeye Cannabis Best Idea Long.
GTI reported 4Q22 earnings results earlier this week, and 4Q22 revenue was $259.3M, up 6.4% from 4Q21. FY22 total revenue increased 13.9% to $1.0B. Revenue growth in 4Q was primarily driven by the legalization of adult-use sales in New Jersey, which began on April 21, 2022, as well as revenue generated from acquisitions made throughout 2021. Retail sales in 4Q22 were up 14.2% YoY, and SSS grew 3.4%. Gross profit was 47.8% of revenue in the quarter compared to 52.8% of revenue last year. The decline in gross margin was driven by the pricing headwind that we continue to see. Net loss in the quarter was ($51.2M) or ($0.22) per basic and diluted share, compared to net income of $22.8M or $0.10 per basic and diluted share in the prior year. EBITDA for the quarter was ($19.6M) or (7.5%) of revenue compared to $75.6M or 31.0% of revenue from last year. As of December 31, 2022, current assets were $351.4 million, including cash and cash equivalents of $177.7 million. The total debt outstanding was $275.7 million.
“In 2022, Green Thumb reached $1 billion in annual revenue while delivering over $300 million in Adjusted Operating EBITDA. Our team continued to execute on our mission by building authentic brands that resonate with consumers. As a federally illegal business with limited access to capital, we remain focused on our cash position, while consistently paying interest and taxes on time. The lack of progress regarding cannabis regulation from our elected officials in Congress is mind-numbing. The crippling tax burden continues to hurt new operators by greatly reducing their prospects for a profitable and sustainable cannabis business,” said Green Thumb Founder, Chairman and Chief Executive Officer Ben Kovler.
The company faced many headwinds in 2022 and yet they continue to put up very solid growth numbers. The company beat street estimates on the top line and the management team continues to impress.
Does Anyone Work In D.C.?
Last summer, U.S. Attorney General Merrick Garland told us that his office would be releasing its thoughts on U.S. cannabis policy in the coming days. THAT WAS LAST SUMMER. Has that happened yet? NOPE. Yesterday, Garland said that the DOJ is still working on cannabis policy and that the federal health officials are currently taking the lead on President Biden's request, from back in October, to review rescheduling/descheduling cannabis as a schedule 1 drug. “I think that it’s fair to expect what I said at my confirmation hearing with respect to marijuana and policy, that it will be very close to what was done in the Cole Memorandum,” he said, which refers to Obama-era policy in which the federal government took the approach that they would not interfere with what the states are doing on this topic. This policy was later rescinded by Trump administration. I am not going to hold my breath that anything positive will come out of DC, not until state actions force them to. An interstate commerce agreement between two states might just force these guys to take a stance.
Glass House Expansion.
Glass House Brands (GLASF) is a Hedgeye Cannabis Best Idea Long.
Glass House Brands(GLASF) announced yesterday plans to retrofit an additional greenhouse to expand production at its SoCal Farm, targeting an incremental one million square feet capable of producing 250,000 pounds of high-quality sun-grown cannabis annually with commercial cultivation to begin by the end of 2023. This expansion plan follows the successful completion of the company's Phase I SoCal Farm expansion in 2022. "This new greenhouse capacity will more than double the current production footprint of our SoCal Farm and build on the incredible momentum we've generated over the initial two quarters of operating this amazing greenhouse farm. The last two years have been challenging for the industry, and since the beginning of July 2022 alone, the number of cultivation licenses in the state of California dropped by over 1,200, which we estimate is an 11.7 million square foot (or 13%) decrease in acreage under cultivation. We believe this is a good time to bring on additional capacity," said Co-Founder, Chairman and CEO of Glass House Brands, Kyle Kazan. "In February alone, 265 cultivation licenses were not renewed out of 519 that were up for renewal. This is a non-renewal rate of 51%." GLASF reports earnings on March 13th.
